Congress vows to forge ahead with probe into energy giant | South China Morning Post
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  • Mar 4, 2015
  • Updated: 3:19pm

Congress vows to forge ahead with probe into energy giant

PUBLISHED : Saturday, 26 January, 2002, 12:00am
UPDATED : Saturday, 26 January, 2002, 12:00am

United States legislators have vowed to forge ahead with detailed investigations into the collapse of energy giant Enron despite a frustrating start to the first round of public hearings.


Initial sessions in the US Congress raised more questions than answers as auditors Arthur Andersen shifted blame for extensive shredding of Enron documents firmly on to sacked partner David Duncan, who hid behind his constitutional right to silence.


House Energy and Commerce Committee chairman Billy Tauzin said: 'We certainly have not found out today the answer to the burning question, which was why those documents were destroyed.'


Other congressional figures expressed fears that Andersen may be using Mr Duncan as a scape-goat to protect more senior management in the firm, which has insisted it acted properly when it learned thousands of vital documents had been destroyed.


Republican Jim Greenwood said: 'After four hours of questioning Andersen staff, I still have in my mind a very large question as to whether Mr Duncan and others are fall guys for the [top] brass.'


His comments follow the first day of his committee's hearings - the first of nine different congressional panels due to examine the collapse over the next six weeks in one of the most intensive reviews ever undertaken by congress.


All aspects of the bankruptcy - that saw workers lose millions in retirement savings and shareholders billions in equity - will be investigated, from Andersen's role to Enron's extensive political ties, especially with the presidency of George W. Bush. Accounting and auditing standards are also expected to face thorough scrutiny.


The hearing was dominated by an apparent delay in in-house instructions to Mr Duncan and eight others to stop any destruction of Enron documents.


A key memo was sent on November 10 - despite public reports as early as October 22 that the Securities and Exchange Commission was scrutinising Enron's accounts.


While he refused to testify yesterday, statements made through his lawyers claim he was merely acting in accordance with an October 12 memo that outlined document protection policies - and made clear that some papers could be destroyed.


House legislators were particularly troubled as to why it took until November 10 for Andersen in-house lawyer Nancy Temple in Chicago to send a memo to Mr Duncan and eight others instructing them to preserve documents relating to Enron.


It was public knowledge, as early as October 22, that the SEC had begun an informal inquiry into Enron's accounting practices.


Mr Duncan, who led Andersen's audit of Enron, has said through his lawyer that he did nothing improper. He maintains he was acting in response to an October 12 e-mail from Ms Temple that reminded employees of Andersen's document preservation policy, allowing for the destruction of papers.


Some legislators said they feared such a memo was a 'coded message' to push ahead with widespread shredding of documents as Enron's woes deepened.


Several Andersen executives faced stiff questioning from legislators, but chief executive Joesph Bernadino avoided the hearing, pledging to appear later.


Dorsey Baskin, the managing director of Andersen's professional standards group, told legislators that Mr Duncan was squarely to blame but praised the firm for alerting authorities and Congress once it was aware of the loss.


'Although the firm was well aware of the potentially devastating impact this discovery could have had on our reputation, we did the right thing,' he said.


Graphic: enroncgbz


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